Interest-Free Credit

Unfortunately, there is no such thing as 'free credit', and you will always end up paying for it in one way or another:

• The cost the free credit may be put onto the price of the goods.
• If the 'free credit' is for a limited period, you will pay a much higher rate of interest than the market rate when you do start paying. There can be penalties for early repayment so you have to pay the higher rates for a fixed period even if you can afford to pay off the loan.
• You will be charged a huge penalty if you fail to start paying when the free credit period ends. Often no reminder is sent out until it's overdue.

You could avoid these traps by paying in cash and asking for a discount instead of 'free credit'. However, you may find that there aren't many people willing to take you up on this offer - sales associates in shops offering these types of deal get a small basic salary, and make most of their income on selling credit agreements and insurance contracts for after sales breakdowns and maintenance.

However, if you do decide to go for the free credit, read the small print very carefully, and work out what the real cost of the payments of the 'free credit' deal are. Then see if you can get cheaper credit elsewhere - perhaps from a personal loan.